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Shanghai Gold Exchange Launching International Bullion Exchange In Yuan Next Month
China Becoming Global Gold Hub And Gold Price Discovery Centre
China is moving closer to positioning itself as the physical gold trading hub of the world and the world’s gold price discovery centre. It is a natural progression for the largest economy in the world and for the world’s largest gold buyer, importer and indeed producer.
The Shanghai Gold Exchange (SGE) is launching its yuan denominated international bullion trading exchange next month. This is another important step in internationalising the yuan or renminbi and positioning it as an alternative global reserve currency.
Bloomberg reports this morning that
The Shanghai Gold Exchange plans to start bullion trading in the city’s free-trade zone on Sept. 26, according to three people with knowledge of the matter.
The people asked not to be identified because they aren’t authorized to speak to the media. Gu Wenshuo, a spokesman for the exchange, confirmed that the trading system is being tested, without giving further details.
Shanghai wants to become a regional bullion-trading hub, giving foreigners access to the world’s largest physical-gold market, Xu Luode, the exchange’s chairman, told a conference in Singapore in June.
The gold contract will be priced and settled in yuan and the infrastructure is in place for trading to start in the third quarter, Xu said in June. The zone will have a vault capable of holding 1,500 metric tons of gold, which can either be imported into China or be in transit to other markets, Xu said.
China is seeking to open up its bullion markets just as domestic demand weakens. Consumption contracted 19 percent in the first six months of the year, according to the China Gold Association. Bullion of 99.99 percent purity traded on the Shanghai Gold Exchange climbed 8.7 percent this year, damping demand which reached a record in 2013.
Reuters reports this morning that
China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal.
The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre.
China and other Asian gold trading centres such as Singapore are calling for more localised pricing of the precious metal as they seek alternatives to the so-called London fix, the global benchmark for spot gold prices, which is being investigated by regulators on suspicion that it may have been manipulated.
Standard Chartered (STAN.L), Shanghai Pudong Development Bank (600000.SS) and China Merchants Bank (600036.SS) were given regulatory approval recently to import gold, five sources with direct knowledge of the matter told Reuters.
China approached foreign banks, gold producers and refiners to participate in SGE's international bourse, sources told Reuters earlier in the year, to boost its position as a price-discovery centre for gold. It plans to launch three physically-backed gold contracts.
The chairman of the exchange said in June that China should have its own pricing benchmark as it is the biggest consumer and producer of gold.
Conclusion
Chinese gold demand has fallen from record levels in recent months. this was to be expected given the huge leap in demand seen in recent years. Nothing moves in a straight line and a fall was inevitable and reflects the natural ebb and flow of demand, one would expect.
However, an important fact, not realised by most market participants, is that the people of China were banned from owning gold bullion by Chairman Mao in 1950. This means that the per capita consumption of over 1.3 billion people is rising from a miniscule base. This suggests that demand will consolidate at these levels and could again return to record levels - particularly if there are losses in the Chinese property market or stock markets.
This prohibition continued until 2003 when the Chinese gold market was first liberalised and China made its first steps to becoming a global gold hub to rival New York or London.
Since the market in China was liberalised, gold in yuan terms has risen by more than 250% while the stock market has performed poorly.
Even after the significant increase in demand seen in recent years - Chinese per capita gold ownership remains well below that of the levels seen in India and other Asian countries and indeed below levels seen in more affluent Hong Kong.
Culturally, India is known to have the greatest affinity for gold in the world. China had a similar cultural affinity prior to the "cultural revolution" and in time its levels of gold ownership will likely rival those seen in India, Vietnam and other Asian countries.
Within the lifetime of many Chinese people living today is the experience of hyperinflation as many middle aged and elderly Chinese people experienced hyperinflation in 1949.
Therefore, as in Germany, there is a greater awareness of what inevitably happens when a central bank debases the paper currency.
Many market participants and non gold and silver experts tend to focus on the daily fluctuations and “noise” of the market and not see the “big picture” or major change in the fundamental supply and demand situation in the gold and silver bullion markets.
This is particularly due to investment, store of wealth and central bank demand from China and the rest of an increasingly affluent Asia.
Gold Bust (2.8 Kilogramme) of Deng Xiaoping (Reuters/Bobby Yip)
It is worth noting that the People’s Bank of China’s official gold reserves are very small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $3 trillion.
The People’s Bank of China is continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices. They also do not wish to create a flight from the dollar – thereby devaluing their sizeable dollar reserves.
Expect an announcement from the PBOC, sometime later this year or in 2015, that they have trebled or even quadrupled their reserves to over 3,000 or 4,000 tonnes.
Source: China Becoming Global Gold Hub And Gold Price Discovery Centre
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The U.S. is still the best country in the world in which to live (ask 11 million south-of-the-border amigos). We just happen to have a fully-socialist POTUS and his henchmen (and hench-women) in charge at the moment. This will soon change. The constitution is stronger than one administration. Freedom will prevail.
Nice positive attitude. Keep it up. You will need all of it and more to survive in the shithole called the USA.
Riiiiight...Because once the other side gets in, the clouds will burn away, songbirds will help us dress in the morning, and all will be well in the world...
(sarc)
in my best Homer Simpson voice:
Mmmmmm. Freeeee-dummmmmb!
Here is an NSA troll newbie.
Go back to ask some training to your hierarchy. This is zerohedge here, and people are hard to fool . Come back next time with a better speech and we see if you improve your troll work. We might even give you arrow if you are a creative troll.
Tell that to the Patriot Act. Clearly you have been living on another planet.
Please explain free..dom, we wish to know what this free..dom and lib..erty is about.
Regards
The sheeps
It's the best place for me, too. I don't like snow and don't speak Norwegian.
HAHAHAHAHAHAHAAAAAAAA.... oh wait, ur serious.
Ur serious? AAAAAAAHAHAHAHAHAHAHAAAAAAAA
There is a difference when one trades paper "WEST" and one trades physical "EAST".
This is NOT Rocket Science.
I just want want the paper market to collapse!
Hurry up!
N.B. The collapse of the Paper Market doesn't means a re-connect to physical gold - then we'll have some fun!
How soon we forget the paper market took gold to $1900.
You would have died if they killed it then
Remember the silver market when they killed paper.
I am not sure that the they have to allow the paper market to collapse in PMs. It depends on how far they are willing to go to suppress prices.
The Jews control the UK, US, Europe, Canada, Australia, New Zealand, yada yada - even Putin is a Jew (one of his ancestors - who looks like a Jew version of Putin) defended the Autonumous Jewish region in the Jewish Bolshevik revolution. They can make the PM price anything they want, on paper, in these markets. They already suspended physical delivery at times. So they just have to worry about leaks i.e. China, India, and perhaps others. Perhaps they can prevent trade in PMs between Jew controlled nations and the few others. What does it matter if the Shanghai market has a higher price for PMs if you can't send your PMs there? Would they be willing to be that obvious? They tell obvious lies all the time.
Update: Not related, Ferguson Police officer who shot Mike Brown will be cleared and killing of Mike Brown will be justified. This will be another Rodney King X10.
A new world will soon be coming to America.
Link on that
The issue in Ferguson is this: A policeman shot a citizen. Other citizens gathered peacefully in the street to publicly demand an impartial investigation. Those protestors, who were exercising their constitutional rights, were met by a fully militarized police force which for some reason did not want peaceful citizens to exercise their 1st amendment rights. When a militarized display was not sufficient, provocateurs were unleashed. Their assignment was to loot Ferguson while the police, so worried about peaceful protest, stood back and watched. Subsequently a whole circus of disinformation and misdirection has been unleashed to obscure the real issue.
THE END.
There is more to it than that. Young black men are dangerous as revealed by federal murder and crime statistics, Yet the Jewish controlled media suppress this. The same media tell blacks that whites are the problem. That is creating the race problem which we see. So, Jews are creating demand for a paramilitary police force. Problem, reaction, solution - which is bringing in the Jew World Order.
There are two markets for gold. The hidden one for central banks and other large, important entities transacts at the real, higher, market price. The "public" market for little guys is completely suppressed.
The two tier system does a lot to relieve any economic and political pressures on gold while insuring the little guy has no alternative to fiat.
That is to say political and economic pressures that some feel will cause the price of gold to skyrocket will have no impact on the 'public' price of gold. There will be no need for confiscation, because sooner or later "golden dead money" will be discarded and accumulated by people operating in the hidden market.
Completely false and very foolish statement. In five minutes you can find out on this same computer that this is nonsense. "There is no real higher market price"---This is craziness; try not to let it get a grip on your mind.
You haven't walked the trail. Thats easy to tell from your comment. Check out Another, FOA and FOFOA for some gold edumacation.
Try buying 20 tons of gold and see what happens. You will find very quickly that there is another price for gold.
Don't believe me? Tell that to the Germans, they could use the help.
You lost me at "Bloomberg". This is pure propoganda. There is no reduction of demand in China. This statement is made on the basis of imports from Hong Kong, which have declined because imports are now being made directly into Beijing and Shanghai. The Chinese don't want the true extent of their imports/reserves to be known. And Bloomberg et al, for their own reasons, are more than happy to play along.